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Robotics, a broad category, presents exceptional upside for savvy investors who know how to be selective and capitalize on robust, secular trends.
To put it in perspective, these machines have legs (in some cases they really do) — with ever more capable technology, faster and cheaper silicon, evolving artificial intelligence (AI), and expanding bandwidth — all of which support more automation and fewer human hands across a full spectrum of endeavors.
To top it off, the COVID-19 pandemic has resulted in labor shortages and restrictions on human-to-human contact, creating even more opportunities for robotics to fill labor demand, perhaps most visibly in the food services and restaurant sectors.
It’s fair to say that it’s still very early days in the Robotics Revolution, which of course means the opportunity to earn a healthy return by investing in the shares of companies being pulled along in the automation swift current.
In part, investment decisions may prove somewhat challenging. Many of the companies leading the field are senior blue chips in the military/industrial complex — with share prices in the hundreds of dollars. So configuring a strategy to fit the average investor who wants exposure to this sector will be critical.
Just how you play the robotics game could make a big difference in your rate of return. Critical evaluation of your tolerance for risk and expected returns would be a good starting point.
That having been said, the sector can be described as extremely compelling, as we are talking about the future here. Overall, the performance numbers and forecasts look hot.
The global market for robotics, pegged at 796.3 thousand units in the year 2020, is projected to reach a size of two million units by 2026 — a compound annual growth rate of +16 percent. Good numbers by any standard.
To get an idea of just how much muscle is behind commercial robotics, it’s always interesting to keep an eye on industry leader Boston Dynamics. With dancing robots and frightening anthropomorphic creations, these designs come closest to the vision portrayed in the American science fiction film Robocop.
In June 2021, Hyundai Motor Company (OTC US: HYMTF) announced it had officially completed its acquisition of robotics company Boston Dynamics. The deal valued Boston Dynamics at a whopping $1.1 billion. The purchase sees Hyundai pick up an 80 percent controlling stake in the company, with the previous owner, Softbank, retaining 20 percent ownership.
The deal will hopefully create an increasingly stable home for Boston Dynamics, which has continued to pump out the world's most impressive robots despite ownership changes. The company was spun off from MIT in 1992 and survived for most of its life on DARPA (Defense Advanced Research Projects Agency) research grants.
The acquisition by Hyundai puts a lot more muscle behind Boston Dynamics, to state the obvious. It’s also an indication of how forward-looking Hyundai is, so it might be a good idea to keep an eye on this South Korean multinational company for reasons other than just the Boston Dynamics deal — particularly as the country continues to grow as an industrialized nation, while maintaining the 4th largest economy is Asia.
It’s noteworthy that the robotics revolution comes against a backdrop of Covid pandemic related labor shortages. In both the US and Canada, it’s arguably at its most visible in food services and restaurants, as up to 80 percent of restaurants report staffing challenges.
That’s where companies like Miso Robotics are stepping in, as they test burger-flipping robots at CaliBurger and White Castle and are dipping into wing production at Buffalo Wild Wings. Personally, I’m a White Castle guy, but that aside…
Rockwell Automation (NYSE: ROK) is an industrial strength presence in food and beverage processing, among other sectors. Rockwell is committed to building out the next generation in smart manufacturing.
Up and down the food chain (pun intended), increasingly sophisticated automation — robotics if you will — is already shaping the future of food services. From farm to table, robotics is having a profound impact. Smart investors who position wisely could do well.
There’s a lot more to robots and robotics than flipping burgers. Robots are now used not only in the operating room, but also in clinical settings to support health workers and enhance patient care. During the COVID-19 pandemic, hospitals and clinics began deploying robots for a much wider range of tasks.
It’s become clear that the operational efficiencies and risk reduction provided by health robotics offer value in many areas. For example, robots can clean and prep patient rooms independently, helping to limit person-to-person contact in infectious disease wards.
In short, health care robotics enable a high level of patient care, efficient processes in clinical settings, and a safe environment for both patients and health workers.
One of the leading robotics groups in the medical world, Intuitive Surgical (NASDAQ: ISRG), offers robotic-assisted, minimally invasive surgery equipment and solutions. Its da Vinci surgical system allows surgeons to view a 3D, high-definition image of the surgical field through an ergonomic console.
The company has been using advanced robotics since 1995. The da Vinci surgical system was one of the first robotic-assisted, minimally invasive surgical systems cleared by the FDA. To date, the family of da Vinci technologies has been used by surgeons in some 67 countries around the world to perform more than 8.5 million procedures.
Asensus Surgical (NYSE: ASXC) states its mission as “digitizing the interface between the surgeon and patient, pioneering a new standard of surgery for increased control, less variability and consistently superior outcomes.”
Unlike many of the companies in robotics, with share prices in the hundreds of dollars, Asensus stock is priced in the $1.50 range, offering the average investor an opportunity to gain significant leverage with exposure to medical robotics.
Be aware that the modest share price reflects the fact that the company’s future is far from certain. There is risk with this pick, but if Asensus does prosper, investors could stand to enjoy exceptional returns.
Stryker Corporation (NYSE: SYK) develops different types of robots for use in health-related matters, including robotic surgery. The Mako smart robotic line of the company offers arm-assisted surgeries, knee medicals, and total hip processing. The smart robots also offer data analytics and a dedicated team from the firm works with professionals to verify and review the data for better insights.
Clearly, the trend toward robots in all areas of medicine is accelerating. Note that pharmaceutical companies are currently hiring for robotics jobs at a rate higher than the average for all companies within GlobalData's job analytics database.
What about online shopping and fulfillment? Amazon leads the category for companies in the retail sector.
In response, a startup called Fabric is building technology to help those other online retailers — large and small — compete more squarely against the Amazon behemoth, specifically in fulfillment with robotics technology, “micro-fulfillment” centers and last-mile operations.
The surge in online shopping has been compounded by a desire for faster shipping — a tough ask in the midst of a pandemic. While the same-day delivery market in the US is poised to grow by $9.82 billion over the next four years, a worldwide labor shortage, not to mention backups at critical ports of call, make the prospect daunting for merchandisers without economies of scale. Thus the need for better, faster, cheaper robots in warehousing and delivery.
Going from the sublime to the, well… not-so-sublime, there’s iRobot (NASDAQ: IRBT), the maker of the now ubiquitous Roomba household vacuum. Mundane as it may seem, robots that do domestic chores have been around for quite a while, and continue to evolve. That’s a trend that won’t change anytime soon. Robotic butlers? Bring me my slippers, Jeeves.
Machines and automation took us from an agricultural society to an industrial one. Robotics will help bring us into the post-industrial age.
Some rue the disappearance of the good old family farm. Changing times, changing culture. In the future our farms, now mostly so-called factory farms, are likely to be run by the android family. Actually, it’s happening right now.
Machinery giant Deere & Company (NYSE: DE) manufactures heavy equipment for farming, forestry, construction, and other industries. The company operates a precision agriculture department that has developed autonomous electric tractors for use on farms for better crop yields at lower costs.
It also offers an autonomous drone that sprays farm-care products on crops to protect and nourish them. The firm is also exploring ways to automate farm-related decision-making using machine learning.
UiPath (NYSE: PATH) offers an end-to-end platform for automation, combining Robotic Process Automation solutions with a suite of capabilities that enable every organization to scale digital business capabilities. The company aspires to have a robot for every person, hoping to transform the way humans work.
UiPath aims to “enable the development of creative business ideas and foster the capacity to scale early-stage companies and entrepreneurial ventures from Central and Eastern Europe and Turkey. With the fast pace of innovation in software automation and yet a huge pool of untapped potential, the company is keen to help emerging players into the space to reach full potential,” according to the company’s website.
Teradyne, Inc. (NASDAQ: TER) is another leading automatic equipment designer and manufacturer. Well-known technology firms like Samsung (KSE: 005930), Qualcomm (NASDAQ: QCOM), Intel (NASDAQ: INTC), Analog Devices (NASDAQ: ADI), Texas Instruments (NASDAQ: TXN), and IBM (NYSE: IBM) use the services of Teradyne.
The firm markets several robotics products including semiconductor testing, which includes their UltraFLEX, a system designed for testing high-performance chip-based electronic devices. The firm also makes collaborative robots and in-circuit testing devices.
Of course some robots need eyes. Ambarella Inc. (NASDAQ: AMBA) develops and manufactures HD video compression and image processing semiconductors. Its products are used in a range of human and computer vision applications, such as video security, autonomous driving, driver/cabin monitoring, and other robotic applications.
While we’re on the subject of computer vision, we can’t overlook NVIDIA (NASDAQ: NVDA). According to a third-party estimate, the growing application of graphics cards in the fields of augmented reality and virtual reality will be one of the many catalysts for the GPU (graphics processing unit) market, which could hit $200 billion in revenue by 2027 as compared to just $20 billion in 2019. NVIDIA can tap into this huge opportunity with its Omniverse solution that uses multiple GPUs to render resource-hungry scenes in real time.
We’ve seen this one coming forever. Wars fought by machines. Newsflash — it’s here... now. And there’s big money potential here.
AeroVironment, Inc. (NASDAQ: AVAV) is a California-based defense contractor. The company is primarily involved in the business of making unmanned aerial vehicles for the US military, but also does other defense-related projects.
The products marketed by the company include battlefield, tactical, intelligence, surveillance, and reconnaissance drones. The firm says that it has so far delivered more than 35,000 products to 50 allied nations across the world.
Raytheon Technologies Corporation (NYSE: RTX), a leading multinational company working in the aerospace and defense industries, uses robotics technology to make systems that inform soldiers where the enemy is hiding.
Its hypersonic solutions, unmanned vehicles, anti-drone technology equipped with EMP (electromagnetic pulse), and bomb disposal systems all demonstrate robotics in application. The defense company is also using robots to automate its missile production lines.
Even before the COVID-19 pandemic, the robotics sector had certainly established itself in a growth groove. Now emerging is the reality of structural changes to the workforce and an acceleration of growth in online activity — restaurant and retail being prime examples.
Both of these sectors are characterized by plenty of low-paying and often repetitive tasks and have been quicker to pick up on smarter, more flexible machines. That’s a trend certain to extend to other sectors well into the future.
What we now see is that many people furloughed from jobs don’t plan to return. So even in the most basic of operations in warehousing and delivery, and in food services, there is a wealth of opportunity for robotics to advance.
In more sophisticated arenas such as medicine and military, rapidly developing technology, artificial intelligence, growth in remote services, and greater bandwidth all point to a future where robotics handle a growing number of increasingly sophisticated tasks.
When it comes to investment, it’s always a lot smarter to swim with the current. As they say, the trend is your friend. So when it comes to robotics, it seems the future is very friendly indeed. I’ll bet my name on it!
Blake Desaulniers, Contributor
for Investors News Service
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